INSITE FAQ - INSITE Program


Is INSITE data deemed to be a book or record within the meaning of NASD Rule 3110?

 

No, INSITE data is drawn, however, from books and records maintained under securities industry regulations, but is not itself a book or record within the meaning of NASD Rule 3110.

 

With whom does FINRA share INSITE data and/or analysis of that data?

 

  1. NYSE?
  2. Other SROs?
  3. SEC?
  4. Investors involved in SRO arbitrations or other legal proceedings?
  5. Other member firms?
  6. What notice, if any, will firms receive if this is done?

 

In keeping with current practice regarding data in regulatory systems, FINRA shares INSITE data and analysis with the SEC or other SROs upon request for a legitimate regulatory purpose. When INSITE data is shared with other securities regulators, FINRA does not notify firms of such actions. We do not provide this information to investors in arbitrations or other legal proceedings, nor to other member firms. INSITE data and analysis may be subject, however, to subpoena in legal proceedings.

 

What infrastructure does FINRA require be in place at self-clearing broker/dealers to respond to inquiries from FINRA staff about INSITE data which the broker/dealer has submitted?

 

  1. What time frame will FINRA allow for responses to those inquiries?
  2. How frequently does FINRA anticipate making such inquiries?

 

FINRA deals with firm compliance or designated operational personnel regarding INSITE data in the same way it does with respect to other compliance matters. This is the case not only with the data filed daily, but also with other data from internal FINRA databases on a monthly and quarterly basis.  

 

To what extent will FINRA ensure that all firms are defining required elements the same so that the submission statistics are not skewed by a firm's interpretation of the data elements and what must be submitted?

 

Part of FINRA's examination program focuses on data integrity issues not only for daily INSITE filings, but also on other data that underlies such systems as FOCUS, customer complaints, etc.
 

What steps has FINRA taken to ensure the confidentiality of the data? Possible problems include:

 

  1. accidental release of the data to the public, including competitors
  2. unauthorized access to the data (i.e., through a computer hacker)
  3. use of the data by FINRA staff after they leave FINRA, particularly in situations where a FINRA staff joins a   member firm and previously had access to all the INSITE data for that firm's competitors for a period of time.

 

Once data is collected, the system does not transmit data to any external entity.

 

From an access perspective, the data resides on the FINRA private network with multiple firewall layers. Access to the information is granted only to staff members requiring access via user ID and password.

 

FINRA has strict policies in effect today regarding the confidentiality of regulatory data and require all employees with access to INSITE data to exert the same care regarding its use that they do today with data in other systems.

 

Are correspondent clearing firms required to report INSITE data for non-FINRA members and foreign entities?

 

No, correspondent firms are required to report INSITE data for FINRA members ONLY.

 

Are correspondent clearing firms required to report INSITE information regarding their own activities, the activities of correspondent firms that carry customer accounts or correspondent introducing firms that do not carry customer accounts?

 

Clearing firms are required to file data on their own self-clearing activities and on their correspondents. Exemptions may be available for correspondents that do not carry customer accounts.

 

Are firms that do not carry customer accounts given an exemption from providing INSITE data?

 

  1. If so, does the exemption apply to both (i) a self clearing firm that only does proprietary trades and does not carry customer accounts; and (ii) a correspondent clearing firm that provides clearing services for a FINRA member who does not carry customer accounts. Any others?

 

Rule IM-3150 includes an exemptive provision from FINRA Rule 3150. Firms are required to request an exemption. 

 

If we don't clear listed options, do we have to report listed option transaction data?

 

No, your options clearing firm will report this data on your behalf and INSITE will combine this data with your direct filings. Simply enter zeros in the affected fields.

 

Some of my firm's correspondents do only listed securities and are NYSE firms. Do these correspondents need to obtain a MPID from FINRA?

 

The INSITE filing requirements only apply to your correspondents that are FINRA members. Every correspondent for which your firm files must have an MPID.

 

My firm is a correspondent of one of the major clearing firms. What are our responsibilities for the INSITE program?

 

If your firm is a correspondent, you are not required to report data to INSITE. Your clearing firm is responsible to report on your behalf. If you don't have an MPID, you need to contact Nasdaq Subscriber Services at (212) 231-5180 opt #3 to have one assigned to your firm.

 

How can my firm obtain an exemption from Rule 3150?

 

If a member firm believes the nature of its business may warrant an exemption under IM-3150, it can submit a request via email to ExaminationPrograms@finra.org or via regular mail to the following address:

 

NASD Member Regulation

Attn: Examination Programs-3150 Exemption Request

1735 K Street NW

Washington, DC  20016.

 

How should omnibus arrangements for another clearing firm be handled for purposes of INSITE reporting?

 

Since only the omnibus clearing firm can determine data at the correspondent level, the omnibus firm is responsible for INSITE reporting.

 

Who is responsible for INSITE filings when a correspondent firm uses multiple clearing firms?

 

Each clearing firm reports the data it has available on the correspondent. INSITE will combine the data for the correspondent.

 

For firms that use multiple systems, or a service bureau and in-house system, does the firm need to consolidate the information prior to submission to FINRA or will FINRA consolidate the information utilizing the firm's B/D number?

 

Multiple organizations can submit data for a broker-dealer and INSITE will consolidate the data.

  

Can I ask a question via email?

 

Yes.  Send us an email.

    Last Updated: 10/3/2008